Medicaid funding loss fears led to state worker furlough decision

Dean Olsen

Thursday

Jul 29, 2010 at 12:01 AMJul 29, 2010 at 11:56 AM

Gov. Pat Quinn based his recent order requiring 2,700 non-union state workers to take 24 unpaid days off — a move expected to save $18 million this fiscal year — on fears that Congress won’t extend a federal boost in Medicaid payments beyond December.

Gov. Pat Quinn based his recent order requiring 2,700 non-union state workers to take 24 unpaid days off — a move expected to save $18 million this fiscal year — on fears that Congress won’t extend a federal boost in Medicaid payments beyond December.

If the enhanced Medicaid payments are allowed to expire, however, the resulting loss of $750 million in federal funding would have a much broader effect on the state, according to advocates for hospitals, doctors and people with developmental disabilities.

Hospitals might have to lay off employees and pay vendors late, Medicaid patients would have a harder time finding doctors, and programs for the developmentally disabled would face further cutbacks, they said.

Other state programs would be pinched as well, creating an even bigger hole in the state budget, said Howard Peters, the Illinois Hospital Association’s senior vice president for government affairs.

“This is a really important issue for the state of Illinois,” Peters said.

In a written statement, officials from the Quinn administration said the impact on the state budget would be “severe.”

Congressional inaction

Peters said the increased federal funding needs to be extended at least through June 2011.

“I certainly wouldn’t encourage anyone to wait around on this issue for the economy to bail us out,” he said.

Congress is feeling pressure from Illinois and 29 other states that have enacted budgets that count on the Medicaid funding continuing through June 2011.

The extension was included in President Barack Obama’s budget proposal, but Congress has failed to pass it. The U.S. House and Senate are scheduled to begin their summer recess in the next week and a half and return to Washington, D.C., in September.

Meanwhile, Illinois and other states with fiscal years that began July 1 are enacting or considering budget cuts in response to Congress’ inaction by Congress.

62 vs. 50 percent

Funded by both the federal and state governments, Medicaid pays for health insurance that covers 2.6 million low- and moderate-income Illinoisans. Medicaid dollars also support programs for people with developmental disabilities and mental illness.

The federal stimulus package passed by Congress after Obama was sworn into office boosted the federal Medicaid matching rate, which varies by state, retroactive to October 2008.

The federal government used to pay half of Illinois’ Medicaid costs. Because of the stimulus, the federal government now covers 62 percent of Medicaid costs in Illinois.

About one-third of Medicaid dollars pay for hospital services, and the enhanced percentage has allowed Illinois to reduce its Medicaid payment cycle, Peters said.

Hospitals that used to be paid 180 to 200 days after submitting Medicaid bills to the state now are paid within about 30 days, he said.

Low, slow payments

If the extra federal dollars go away, hospitals would see delays in payments, and that could lead to more borrowing by hospitals, tighter budgets and layoffs, Peters said.

“Keep in mind that when Medicaid pays providers, those dollars turn immediately into economic opportunity at the community level,” he said.

Doctors who already put up with meager payments for many Medicaid services probably would accept fewer Medicaid patients if the payment cycle lengthens, said Dr. Steven Malkin of Arlington Heights, president of the Illinois State Medical Society.

Peters said Illinois deserves a permanently higher Medicaid match from the feds. He noted that Illinois provides 4.5 percent of the nation’s total Medicaid-funded services, but receives only 3.3 percent of matching federal Medicaid dollars.

Dean Olsen can be reached at 217-788-1543.

Party split

Opposition to a proposed extension of the enhanced federal Medicaid match is concentrated among Republicans worried about adding to the federal deficit, according to Illinois Hospital Association spokesman Danny Chun.

He said the federal economic stimulus, which originally boosted Medicaid reimbursements to states, was a “short-term sugar high that created artificial and unsustainable expectations regarding government spending.”

U.S. Rep. Phil Hare, D-Rock Island, believes it’s hypocritical for Republicans who backed tax cuts for the wealthiest Americans during the administration of President George W. Bush to become “penny pinchers” when it comes to programs to help the poor, Hare aide Tim Schlittner said.

Steve Tomaszewski, spokesman for U.S. Rep. John Shimkus, R-Collinsville, said Shimkus would consider supporting the enhanced Medicaid extension if it wouldn’t be paid for with deficit spending. Supporters of the extension haven’t identified a revenue source to pay for it.

“If the … extension is important, it should be important enough to pay for,” Tomaszewski said.

Both of Illinois’ U.S. senators — Democrats Dick Durbin of Springfield and Roland Burris of Chicago — support continuation of increased federal Medicaid funding.

-- Dean Olsen

Statement from the Quinn administration

“The fiscal 2011 budget was based on the continuation of the FMAP (federal medical assistance percentage). The loss of FMAP would have a severe impact on our state as well as other states that included this funding in their budgets. …

“We are already struggling with how to survive the loss of a billion dollars of educational stabilization funds. It is vital that FMAP is extended so that states can provide the health-care services, as well as other human-service and educational programs on which so many residents have come to rely. …

“We have mobilized an advocacy group in Washington, D.C., to help work with us on this issue.”

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